Finance (No. 2) Bill

Nigel Huddleston Excerpts

Committee of the whole House
Wednesday 8th May 2024 Commons Chamber

[The Financial Secretary to the Treasury (Nigel Huddleston)]

It is an honour to open the debate. I will start by setting out how, because of the progress the Government have made, we have been able to cut taxes as part of our plan to reward work and grow the economy.

The Government cut national insurance at both the autumn statement and the spring Budget and have made above-inflation increases to thresholds since 2010, with the basic rate threshold rising from £6,475 to £12,570 today. Taken together, those measures mean that an average worker on £35,400 in 2024-25 will save £1,500 more in personal taxes than they otherwise would have done. Due to the significant real-terms increases to the personal allowance, it is estimated that 1.8 million people will be taken out of income tax altogether by 2024-25, compared with the threshold rising in line with inflation from 2010-11. All workers can now earn £1,000 a month before paying any tax, due to the significant increases to the national insurance starting threshold, which we changed in July 2022.

Let me turn to the first four clauses of the Bill. Income tax is the largest source of Government revenue and helps to fund the UK’s schools, hospitals and defence, and other essential services we all rely on. In 2024-25, it is expected to raise more than £302 billion. Each year, the Government must legislate to charge and set rates of income tax, which is why we are all here today. Clauses 1 to 3 impose an income tax charge and set the rates of it for 2024-25. The rates are not changed by the Bill; rather, we are confirming that they will remain the same.

Clause 1 imposes a charge on individuals to pay income tax for the year 2024-25. Clause 2 sets the main income tax rates—namely the basic rate of 20%, the higher rate of 40% and the additional rate of 45%—for non-savings and non-dividend income of taxpayers in England and Northern Ireland. Those rates are set separately from those in clause 3, as the income tax rates for non-savings and non-dividend income, such as earnings from employment, are devolved to the Scottish and Welsh Governments, and are set by their respective Parliaments. The decision to separate savings and dividends from other forms of income was made as part of the devolution settlement. It ensures that the UK system works effectively and coherently, recognising that dividend and savings income is generally more mobile and generated across the UK, and has some interactions with corporation tax, which is not devolved.

Clause 3 sets the default income tax rates at the same levels as the main rates—namely 20%, 40% and 45%—across the entire UK. These rates apply to the non-savings and non-dividend income of taxpayers who are not subject to the main rates of income tax or to Welsh or Scottish rates of income tax, such as non-UK resident individuals. The clause also sets the savings rates of income tax for all UK taxpayers, again at 20%, 40% and 45%.

As I mentioned, income tax is a vital revenue stream for our public services, without which we could not fund our schools, hospitals, defence and more. It is important that we keep it at its current level.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

I receive emails from constituents asking me why the Government are not unfreezing the personal tax thresholds.

[Nigel Huddleston]

We all know that, because of the level of intervention that we had to take, out of necessity, during the pandemic and in response to the cost of living challenges, Government intervention was far greater than any of us anticipated—to the tune of £400 billion in the pandemic and £100 billion for the cost of living challenges. That money has to be paid back, and I think most of our constituents know that. We have seen the same pattern right around the world, where tax levels have had to be higher out of necessity. That means that thresholds have not been able to move in the way that we would normally like. However, now that economic circumstances are changing, we have turned a corner and we are able to reduce taxes, such as for the 27 million people who will receive on average an extra £900 through the national insurance cuts.

[Jonathan Edwards]

I am grateful to the Minister for giving way a second time. He started by talking about some of the fiscal measures that the Government have taken to reduce tax, but by not unfreezing the personal allowances, are the Government not taking money from one pocket and putting it back in the other?

[Nigel Huddleston]

No. I advise the hon. Member and others to look at their wage slip from a few months ago—say, in December last year. They will see a direct impact because of the national insurance changes that we made in January and again in April. People will see that they are paying less national insurance than in the past. That is transparently and clearly a tax cut. We are able to reduce taxation because the direction of travel is changing.

Taxes have increased across the whole of the western world. Our tax level is projected to increase to about 37%, compared with around 39% in Germany, around 42% in Italy and around 46% in France. This is a phenomenon whereby Governments have had to intervene and spend more money and, as an obvious consequence, they have had to increase taxation to a greater level than anticipated or desired.

However, now that we are back to growth and on a firmer footing, the economy has turned a corner, and we are able to reward the hard work of the British public by reducing taxation. We are doing that in the form of income tax cuts. As the Chancellor and the Prime Minister have said on multiple occasions, we wish to continue in that direction of travel. As I said, people should look at their pay packets. I recognise that it is one thing to talk in the Chamber about implementing laws, but people will now see that in their pay packets in a meaningful way. An average worker on £35,400 will be £900 better off as a result of the national insurance cuts. That is a meaningful amount for constituents right across the country, including those in the hon. Gentleman’s constituency.

Another principle of taxation is fairness. Income tax is fair: those with the most contribute the most. The income tax system is highly progressive, with different rates of tax sitting above an internationally high personal allowance. The top 5% of income tax payers are projected to pay nearly half of all income tax in 2023-24. The top 1% are projected to pay more than 28% of income tax. Thanks to the personal allowance, almost a quarter of individuals will not pay income tax at all in 2024-25. It is important to note that the percentage paid by the top earners is greater than it was under the last Labour Government. In other words, the tax system is more progressive under the Conservatives.

Income tax is also internationally competitive. According to the OECD, the UK has some of the most generous starting allowances for income tax and social security contributions in the OECD, and the most generous in the G7—more generous than in France, Germany, Italy, Canada, Japan and the US. According to the OECD, in the United Kingdom the average single worker faced a net average tax rate of 23.7% in 2023, compared with the OECD average of 24.9%. In other words, in the United Kingdom, the take-home pay of an average single worker after tax and benefits was 76.3% of their gross wage, compared with the OECD average of 75.1%.

I have talked a lot of statistics, but what they mean is more money in people’s pockets to spend as they wish—a fundamental Conservative philosophy. We have also been able to return some money to taxpayers now that inflation is falling and the economy is improving, by reducing national insurance contributions. We have put money back into people’s pockets. We have prioritised tax cuts for those in work, and we believe that that is the best way to stimulate growth in the economy overall.

Clause 4 continues the theme of maintaining the income tax arrangements by keeping the starting rate limit for savings at its current level of £5,000 for the 2024-25 tax year. Many colleagues may be familiar with this but some may not, so briefly by way of explanation, the starting rate for savings is an extra £5,000 tax-free allowance for interest from savings, specifically for individuals who have earned incomes of less than £17,570. That supports in particular people with low earned income, such as pensioners who are reliant on savings interest.

The Government made significant changes to the starting rate for savings in 2015, when they raised the threshold to get the starting rate for savings from £2,880 to £5,000, and lowered the starting rate for savings from 10% to 0%. As many Members will be aware, the starting rate limit for savings must be legislated for each year to confirm the band of savings income to which it applies. Again, that is what we are doing today. This clause will ensure that the limit is held at this level. It ensures simplicity and fairness in the tax system, while maintaining a generous tax relief and supporting the public finances by taking fiscally responsible decisions. As well as benefiting from the starting rate for savings—whereby, as I have said, individuals with earned income of less than £17,507 can earn up to £5,000 in savings income free of tax—savers are supported by the personal savings allowance, which provides up to £1,000 of tax-free savings income for basic rate taxpayers. They can also continue to benefit from the annual ISA allowance of £20,000. Moreover, in the spring Budget 2024 the Government introduced the British ISA, which will provide a new allowance of £5,000 in addition to the existing ISA allowance, along with a new tax-free savings opportunity for people to invest in the UK. Taken together, those generous allowances mean that about 85% of savers pay no tax on their savings income. The Government are committed to continuing to help people on all incomes and at all stages of life to save. The significant increase in the starting limit in 2015 means that the taxation arrangements for savings income remain generous, and the Government therefore believe that it is appropriate to retain the starting rate for savings at its existing value at this time.

The Government are managing the public finances in a balanced and responsible way. Our approach to delivering fiscal sustainability is underpinned by fairness, with those on the highest incomes paying a larger share. By maintaining the current rates of income tax and the starting rate limit for savings thresholds, we will ensure that the highest earners contribute more to the revenue, helping the Government to take a balanced approach to revenue raising while still supporting vital public services.

--- Later in debate ---

[Ben Lake]

I am not one to make up policy on the hoof, but the review could look at that, and if the evidence shows that tax decisions could be made to promote growth and to level up, which I think the right hon. Gentleman is in favour of, we should follow that evidence and do so.

Our continued reliance on the Barnett formula to allocate funds between the UK’s nations is problematic not only due to its flaws, but because of its inconsistent application in recent years, which has meant that Wales has lost out on billions of pounds of much-needed public investment. Members will be familiar with the concerns raised by communities across Wales regarding the way in which HS2 spending has been classified. Although not a single inch of track or rail was to be laid in Wales itself, it was categorised as an England and Wales project under the statement of funding policy, thus depriving Wales of significant consequential funding that the Barnett formula would otherwise have provided. The latest estimates suggest that Wales has lost £4 billion in consequential funding—money that could have transformed the country’s public transport infrastructure.

I understand that there will be reluctance within Government to move away from the Barnett formula, not least because devising a needs-based formula is far from simple. However, if we are to retain the Barnett formula, the funding floor should at the very least be updated to use census data from 2021 rather than the 2001 data it currently uses. I am sure the Minister will agree that much has changed since 2001—when I was actually still in primary school. The needs and population of Wales have changed considerably, so it is only reasonable that the funding floor element of the Barnett formula is at least brought up to date.

Such a consideration could be included in the review that I propose, as well as a review of the implications of UK tax policy in Wales. Again, all of this analysis and information could help inform debate for future tax policy decisions and ultimately ensure that we have a tax system that is fit for purpose and meets the needs of people in Wales.

[Nigel Huddleston]

I thank the Members who have spoken for their contributions to the debate. As we have discussed, the Government have shown their commitment to keeping taxes low in order to support people to keep more of what they earn. That is why we have nearly doubled the income tax personal allowance since 2010, ensuring that some of the lowest earners do not pay income tax, while also benefiting higher-rate taxpayers.

The Government have shown that we are also committed to ensuring that older people can live with the dignity and respect they deserve, and the state pension is the foundation of state support for them. Thanks to the Government honouring our commitment to the triple lock, the basic and new state pensions increased by 8.5% this April—one of the largest ever cash increases in the state pension. Those on the new full state pension will therefore be £900 per year better off. That £900 figure is significant, because of course that is the average amount by which 27 million employees will benefit from the national insurance cut: £900 additional for many pensioners and £900 additional for 27 million workers. I think most people will agree that is fair.

--- Later in debate ---

[Drew Hendry]

Just to be clear, I was saying that the Tories have been hollowed out by the extremists on the right wing within their Government, not that we have an extremist right-wing Government—that is, of course, for people out there to make their mind up about.

[Nigel Huddleston]

I think the hon. Gentleman just dug even deeper there. As I say, I like him but I do not always like what he says. On income tax, I do not think that everybody in Scotland would share his enthusiasm for the Scottish tax system, given that the thresholds and rates are higher, to the tune of up to 5%.

Turning to my opposite number, the hon. Member for Ealing North (James Murray), I will try to avoid the déjà vu all over again—we seem to have the same debate again and again. Yet again we have heard a Labour party spokesman constantly talking Britain down, as if we are in some declinist environment of failure upon failure. That is not a characterisation of the UK, its economy or our constituents that I recognise. I wish he had greater optimism and enthusiasm, and could support the UK economy and the workers to a greater degree. After all, the UK is doing incredibly well.

The hon. Member for Ealing North was right to recognise that all of our constituents are facing extraordinarily difficult times, but he is wrong to believe that is something unique to the UK economy; it is as a result of the pandemic and the cost of living challenges, which have had an impact right the way around the world. Given the extraordinary circumstances that the whole developed world has found itself in, what is extraordinary is how the UK has performed so well. I wish he would recognise the great optimism and the potential future of the UK economy.

For example, the International Monetary Fund has forecast that this country will grow faster than Germany, France, Italy and Japan over the next few years to 2028-29. The hon. Gentleman should also recognise that since the Conservatives came to power in 2010, the UK economy has generated an average of 800 jobs per day. Since Brexit, the UK has gone up the global export league tables, from seventh to fourth. We are the second largest exporter of services in the world and have reached record levels of service exports recently. We have overtaken France to become the eighth largest manufacturer in the world. We have the third largest tech economy, after the United States and China. We have the largest film, TV and creative industries sector in Europe, and one of the world’s leading biotech and life sciences industries—again, it is the largest in Europe.

We are leading the world in renewables, with the first, second, third and fourth biggest offshore wind farms in the world. I could go on, but I will not detain the Committee too much longer, Dame Eleanor. If the hon. Gentleman could recognise just one or a few of those success stories, he might have greater confidence in the UK economy and be able to talk it up. Anybody aspiring to be in government must champion the UK around the world, instead of talking us down. Otherwise, the impact they would have on investment in the UK economy is appalling.

Let me deal with the scaremongering in what the hon. Member for Ealing North and others have been declaring in the past few days about national insurance and the impact on pensions—I found that behaviour deplorable. It could be complete scaremongering because, as we have said, he is not aware of how NI impacts health and pensions. The amount of money spent on pensions is about £130 billion. Welfare spending is £260 billion. NHS spending is £160 billion. That is far higher than the total amount paid for by NI. So to try to suggest some direct correlation and say that reducing NI puts pensions at risk all of a sudden is either economically utterly incompetent or it is sheer scaremongering—neither are particularly attractive attributes in somebody aspiring to be in government. I therefore hope that he will have the decency to take that back. As I said, this scaremongering of pensioners, from the whole Opposition Front Bench, is despicable, although we can perhaps expect it from the Opposition.

Moreover, it is utterly hypocritical, because when we had the NI debate not so long ago, the Opposition spokespeople, the Opposition Front Benchers and the Leader of the Opposition said that they supported our NI cuts, but when it came to a vote they did not. That should make the British people ask: why would the Opposition say one thing and do another. First, I should say that is not a surprise to me, but could it also be that at some future point they might hope to be in a situation where they could reverse that decision and say, “We did not actually vote for it, after all”? Again, they should be straight with the British public.

I thank hon. Members for their contributions—some more than others. The debates will continue, but I hope that I have explained why we do not accept the new clauses. I ask that the clauses we have put forward should stand part of the Bill.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clauses 2 to 4 ordered to stand part of the Bill.

New Clause 1

Review of impact of section 2

“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, publish a review of the expected impact of section 2 of this Act.

(2) The review must include analysis setting out the number of individual taxpayers facing a marginal tax rate in the tax year 2024-25 of—

(a) the basic rate of 20%, and

(b) the higher rate of 40%.

(3) For comparative purposes, the review must take account of—

(a) equivalent actual figures to those in subsection (2)(a) and (b) for the tax years 2021-22, 2022-23 and 2023-24, and

(b) equivalent projected figures to those in subsection (2)(a) and (b) for the tax years 2025-26, 2026-27 and 2027-28.”—(James Murray.)

This new clause requires a review of how many people will be liable to pay income tax at 20% and 40%, and would compare figures for the current tax year with those for the three preceding and three subsequent tax years.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

Oral Answers to Questions

Nigel Huddleston Excerpts

Tuesday 7th May 2024 Commons Chamber

[Paul Blomfield (Sheffield Central) (Lab)]

17. What recent assessment he has made of the potential impact of his tax policies on living standards.

[The Financial Secretary to the Treasury (Nigel Huddleston)]

Thanks to a combination of national insurance cuts and above-inflation increases to thresholds since 2010, the average worker on £35,400 will pay more than £1,500 less in personal taxes this year. In addition, maintaining fuel duty rates at their current levels represents a further £13 billion benefit to households over the three years since the introduction of the freeze.

[Kerry McCarthy]

The Minister will know that people are still really struggling with the cost of living crisis. One way that the Government could help is by seeking a bespoke veterinary agreement with the EU. That would not only cut costs for businesses but stop food prices rising even more. A future Labour Government would do that, so why will the Government not commit to it?

[Nigel Huddleston]

The hon. Lady’s first comment was correct: everyone in this House recognises the extreme cost of living challenges over the past few years, and that is precisely why the Government have adopted the strategy of a laser focus on inflation, combined with tax cuts and, recently, national insurance cuts. We have a very constructive and positive relationship with the EU, and are always engaging with it on a variety of matters.

[Paul Blomfield]

In the run-up to last week’s elections, the Prime Minister never stopped talking about national insurance cuts, and the Minister talked about them again today, but the Government have been giving with one hand and taking away with the other. Does the Minister recognise that according to the Resolution Foundation, the combined impact of all the Government’s tax changes leaves workers who earn less than £26,000 a year worse off? Will he apologise to workers in South Yorkshire, whose average earnings are close to that level, for misrepresenting the position?

[Nigel Huddleston]

Of course we recognise the challenges for those on the lowest incomes, which is precisely why we have adopted a whole bunch of other measures, including on housing allowance. If the hon. Gentleman is so opposed to the national insurance cuts that we introduced, why did the Leader of the Opposition support them?

[Mr Speaker]

Congratulations, Mr Chishti, on your engagement at the weekend. You are not crossing the Floor, I understand.

[Rehman Chishti (Gillingham and Rainham) (Con)]

Most definitely not!

It has just been said that there is a real cost of living challenge, and that is absolutely correct. A key part of that relates to the war in Ukraine, which poses real challenges for energy supplies to the United Kingdom. As a former Minister who applied sanctions to Russia and looked at the oil price cap, I know that we need to ensure that what happens in Ukraine is offset by actions that hold Russia to account and address the cost of living. The US has seized Russian assets to pay for the reconstruction of Ukraine; the UK should do the same. That would help ease the burden on the UK economy and the taxpayer.

[Nigel Huddleston]

It is always a pleasure to see my hon. Friend in his place. He raises a variety of really important issues that show precisely why we work across Government—there are multiple Departments involved—on matters relating to sanctions. The invasion of Ukraine has had an incredible impact around the world, not just in the UK. Everybody in this House should welcome the fact that, because of action taken by this Government and the Bank of England, and other measures, inflation is now falling and will soon hit target.

[Mr Speaker]

I call the Opposition spokesman.

[James Murray (Ealing North) (Lab/Co-op)]

The Conservatives’ decisions in this Parliament mean that the average family will face a tax bill that is £870 a year higher, and pensioner taxpayers will pay £960 a year more. The director of the Institute for Fiscal Studies said:

“This remains a Parliament of record tax rises.”

Higher taxes, squeezed living standards and weaker public services—that is the Conservatives’ legacy. Does the Minister understand why the country has lost confidence in them?

[Nigel Huddleston]

Many people in this country remember the abysmal economic performance of the last Labour Government. The tax-free allowance was £6,475; it is now £12,570. More than 1.5 million people have been taken out of paying income tax altogether. The Government have a focus: now that the economy is turning, we want to put more money into people’s pockets. That is exactly what we are doing with the national insurance cuts and other measures, and I am surprised that the hon. Gentleman does not welcome that.

[John Penrose (Weston-super-Mare) (Con)]

5. If he will use outcome evaluations to assess the effectiveness of the Public Sector Productivity Programme.

--- Later in debate ---

[Andrew Rosindell (Romford) (Con)]

14. Whether he plans to reintroduce VAT-free shopping for international visitors.

[The Financial Secretary to the Treasury (Nigel Huddleston)]

As stated in the spring Budget, the Government are considering the findings of the review by the Office for Budget Responsibility of VAT-free shopping, alongside industry representations and broader data. We continue to welcome further submissions and representations in response to those findings.

[Andrew Rosindell]

Data from Heathrow, the United Kingdom’s largest and busiest airport, shows that despite a near-full recovery in passenger volumes post lockdown, retail spend on affected goods is 32% below pre-pandemic levels. That figure is shocking. Heathrow airport joins hundreds of businesses in calling on the Government to reintroduce VAT-free shopping for tourists, or similar incentives. Will the Minister acknowledge the figures, listen to the industry and reinstate that popular policy, as British businesses are demanding?

[Nigel Huddleston]

My hon. Friend will be pleased to know that I will not only listen to the industry, but I met Heathrow just last week to hear its representations. The challenge is the way that modelling, and forecast and behavioural changes can be confidently assessed. Government estimates suggest that a worldwide scheme could cost as much as £2.5 billion. The challenge is the so-called deadweight cost that could happen by subsidising spending that otherwise would exist anyway, versus the incremental benefit that we could get from new visitors coming to the UK. Of course that is a behavioural change based on a tax change. It is based on a variety of assumptions, and therefore the modelling and assumptions underlying it vary, but I am listening to all representations.

[Mrs Heather Wheeler (South Derbyshire) (Con)]

16. What assessment he has made of the impact of raising the high income child benefit charge threshold on household incomes.

[The Financial Secretary to the Treasury (Nigel Huddleston)]

The high income child benefit charge threshold was raised to £60,000 on 6 April 2024. The point at which child benefit is fully withdrawn was also increased to £80,000, and the Government estimate that that will take 170,000 families out of paying the charge in 2024-25. The Government also plan to administer HICBC on a household rather than an individual basis by April 2026.

[Mrs Wheeler]

I have been contacted by many South Derbyshire parents who are caught in this unfair situation. Can the Minister be even more precise about the savings that this will now mean for my affected constituents?

[Nigel Huddleston]

I thank my hon. Friend for her comments and continual interest in this area. The changes to the high income child benefit charge mean that almost half a million hard-working families will gain an average of £1,260 towards the cost of raising their children in 2024-25. She will recognise that that is a meaningful difference for her constituents, and for those across the country.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

T1.   If he will make a statement on his departmental responsibilities.

--- Later in debate ---

[Richard Burgon (Leeds East) (Lab)]

T2. We have all seen it: the richest Prime Minister in history has spent the weekend telling the public that his plan is working. Well, it is not working for people in Leeds East, whose taxes are going through the roof while our public services are on their knees. Would a better plan not be to go after the tax dodgers, rather than making ordinary people pay the price for this Government’s abject failures?

[The Financial Secretary to the Treasury (Nigel Huddleston)]

I have to say that I find this hypocrisy astounding. First, if the Opposition objected to the national insurance cuts, why did the Leader of the Opposition say that he supported them? If the Opposition are so keen on abolishing tax dodging, why did they not support our Finance Bill, which had measures in place to do just that? They did not support it; they abstained on it.

[Sir Jacob Rees-Mogg (North East Somerset) (Con)]

The Bank of England has said that quantitative tightening is not an official part of its monetary policy targeting, yet it is at risk of costing, fiscally, £179 billion in losses underwritten by the Treasury. That is having a major effect on the fiscal situation of the country. Will His Majesty’s Government encourage the Bank of England to hold these bonds to maturity, taking the carry cost rather than taking the hit from selling them in the market and crystallising an enormous loss?

--- Later in debate ---

[David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)]

May I encourage my right hon. Friend the Chancellor to revisit his decision to change the tax arrangements of furnished holiday lets in rural constituencies such as my own? Those businesses make an important contribution to the local economy, provide jobs and enhance the tourism offering. Indeed, they stop depopulation rather than adding to it. His decision is creating much concern among those who operate such businesses.

[Nigel Huddleston]

We recognise the important role that FHLs play in the tourism ecosystem right across the country. The problem was that there was not a level playing field with long-term lets. We are making sure that there will continue to be tax incentives and benefits from such letting, but they need to be on par with short-term and long-term lets.

Furnished Holiday Lettings: Taxation

Nigel Huddleston Excerpts

Wednesday 1st May 2024 Westminster Hall

[The Financial Secretary to the Treasury (Nigel Huddleston)]

It is a pleasure to serve under your chairmanship, Dame Siobhain. I thank my hon. Friend the Member for Waveney (Peter Aldous) for raising this issue today. It is a topic that I have discussed previously with him and with many hon. Members who have participated in the debate, and I am happy to continue to discuss it. I should say up front that there are no plans for a consultation, but that does not mean that hon. Members cannot engage with me.

At the moment, there is broad recognition that the current system is contributing to some distortions. My hon. Friend mentioned having a bit of déjà vu. In my former capacity as Tourism Minister, I travelled around the country and stood in this Chamber discussing the issue. I had colleague after colleague and industry after industry making claims for and demanding the exact policy that we are introducing, so hon. Members need to recognise that there is another side to the argument.

Although my hon. Friend outlined a different pattern in his part of the country, there are parts of the country where the current regime, with beneficial rates for FHL properties, creates an incentive for a disproportionately large number of properties to be FHL—short-term rentals, rather than long-term rentals—which is causing problems. I have heard hoteliers and owners of B&Bs say that the current system is not fair and reasonable. I have heard owners of pubs, bars and restaurants complain that the large number of short-term lets and FHL properties is undermining their value proposition.

I gently say to hon. Members that we all have colleagues from different parts of the country and there is another side to the argument, although I understand the vehemence and strength of feeling in the Chamber today. I know the pattern is mixed across the country, but the problem is that we cannot do tax treatment, such as income tax relief, ward by ward or constituency by constituency. As hon. Members know, we have a whole range of other initiatives to encourage the supply of housing more broadly and limit the impact, including through local taxation and restrictions on housing.

We are proposing not to abolish FHLs, which play a vital role in our tourism ecosystem across the country, but to change their tax treatment to put them on an equal footing and create a level playing field with long-term lets. The problem is that if I were an investor thinking of buying a property in a certain area, it would make pure economic sense for me to get a short-term let rather than a long-term let. Therefore, in certain communities across the country, when a new property becomes available, there is an incentive for an investor to straightforwardly go for a short-term let rather than a long-term let because there is beneficial tax treatment. We are not eliminating the tax incentives but levelling the playing field so that the perverse incentive no longer exists.

[Anne Marie Morris]

If the Minister is unwilling to undertake a consultation, is he willing to look at a carve-out—an exemption—for properties that cannot be used in the private rented sector because of covenants on them? That was discussed by the Office of Tax Simplification. Will he look at that seriously?

[Nigel Huddleston]

I thank my hon. Friend for that point, which she has raised with me previously. I should put on the record that many hon. Members in the Chamber have raised concerns about the implementation of this proposal with me. The challenge is that one of the goals is simplification, and when we start moving into the area of carve-outs and exemptions, it opens up the system to challenges and potential abuse. I hear what my hon. Friend has to say. She will always hear from Ministers that we keep tax policy under review, but as soon as we start moving to an exemption here and an exemption there, it causes great difficulties. I also thank PASC for its constructive engagement with me on this issue and for giving me information.

I have had lots of correspondence and have engaged with colleagues, and I want to make this very clear. There is a belief that when we said we were abolishing the FHL tax regime, that meant we were abolishing FHLs. No, of course we are not. As I said, they play a vital role in the visitor economy, but we want to change the tax policy. The intention is for the tax reform to apply to all properties.

There will continue to be benefits. After the abolition of the FHL tax regime, a higher rate paying landlord with mortgage interest costs of £12,000 per year would still get up to £2,400 taken off their income tax bill through the relief. If they spend a further £8,000—for example, on insurance, letting agent fees and replacing domestic items such as sofas, fridges, washing machines—they could save a further £3,200 in income tax by using the reliefs that are available for all landlords. It is about levelling the playing field. There will still be tax incentives, but we do not want that distortion. When somebody buys a new property or an existing property, there is a false incentive that is causing some problems, because human behaviour that naturally seeks a better return on investment leads them towards short-term lets, rather than long-term lets. That is what we are trying to correct.

[Mr Carmichael]

On a point of order, Dame Siobhain. When I intervened, I should have pointed out that I have a declarable interest registered. I apologise to the Chamber for not doing so at the time and I hope the position is now clarified.

Tax Administration and Maintenance: Spring 2024

Nigel Huddleston Excerpts

Thursday 18th April 2024 Written Statements

[The Financial Secretary to the Treasury (Nigel Huddleston)]

At spring Budget, the Government cut taxes for working people and announced a range of reforms to support the ambition for a tax system that is simple, fair, and supports growth.

The Government also committed at spring Budget to launch a consultation on the impacts of recent High Court rulings on the private-hire vehicle sector and provide an update on the recent consultation on tackling non-compliance in the umbrella company market.

Today, the Government deliver on these commitments, supporting businesses and consumers, protecting workers and ensuring fair competition.

The Government are also announcing two further technical tax policy proposals that make the tax system fairer and tackle non-compliance.

The announcements today are:

Consultation on the VAT treatment of private-hire vehicles: The Government are publishing a consultation on the potential tax impacts of the recent High Court rulings on the private-hire vehicle sector. This consultation also invites views on potential Government interventions that could help to mitigate any undue adverse effects on the PHV sector and its passengers.

Tackling non-compliance in the umbrella companies market: The Government will publish a response to their consultation on reducing tax non-compliance in the umbrella company market in due course. To support workers and businesses that use umbrella companies, His Majesty’s Revenue and Customs will publish new guidance later this year which includes an online pay-checking tool. The Government are minded to introduce a statutory due diligence regime for businesses that use umbrella companies and will continue to engage with the recruitment industry and other key stakeholders on the detail of this.

VAT treatment of charitable donations: In order to encourage charitable giving, the Government will consult on introducing a targeted VAT relief for low-value goods that businesses donate to charities for them to give away free of charge to people in need. The consultation will be launched later this year.

Mandating postcode provision for freeports and investment zones NICs reliefs: The Government are announcing their intention to bring forward a legislative change to mandate employers operating in a freeport or investment zone special tax site to provide their employee’s workplace postcode to HMRC if they are claiming the relevant secondary class 1 NICs relief through their payroll, in due course. To support this, it will also publish a four-week technical consultation on draft regulations.

The publications and announcements can be found at https://www.gov.uk/government/publications/summary-of-tax-administration-and-maintenance-spring-2024.

[HCWS414]

Finance (No. 2) Bill

Nigel Huddleston Excerpts

2nd reading
Wednesday 17th April 2024 Commons Chamber

[The Financial Secretary to the Treasury (Nigel Huddleston)]

I beg to move, That the Bill be now read a Second time.

Last month, my right hon. Friend the Chancellor of the Exchequer set out a Budget to deliver on the priorities of the Prime Minister and his Government, in the context of an improving economic picture. Inflation has more than halved, down from its peak of 11.1% to 3.2%. Real wages have increased for the ninth month in a row and are now growing at an average annual real rate of 1.9%. The Finance (No. 2) Bill builds on these improvements by seeking to reward work, boosting the housing market, improving the tax system and strengthening the economy. This follows on from our national insurance cuts that, when combined with the autumn reductions, mean 27 million employees will get an average tax cut of £900 a year and 2 million self-employed people will get a tax cut averaging £700 a year, all made possible because we have a plan for growth and for better and more efficient public services. The Bill covers 24 different measures in total and I will outline its most substantive powers.

[Sir Desmond Swayne (New Forest West) (Con)]

Will the Minister consider a further measure to right a historic injustice? In Committee, will he entertain an amendment to allow those caught up in the loan charge access to a tribunal?

[Nigel Huddleston]

I thank my right hon. Friend for his comments. We have had a discussion about the loan charge previously. I do not believe an amendment would be in order on this Bill, but I say to my right hon. Friend and others that I am always open to hearing concerns about the loan charge. I have done previously and will happily continue to hear information, evidence and concerns from colleagues.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for coming to the House to present the Bill. Over the last six months, particularly the last few weeks, farmers have been under exceptional weather pressure, with the implication that they will be unable to cultivate or plough their land or sow their crops. The Minister referred to inflation coming down. By the way, I am glad that it is dropping; we all should be, and if we are not there is something wrong with us. At the same time, inflation cannot come down if the cost of foodstuffs starts to rise. Has the Minister had the opportunity to consider that issue? How can we help farmers to keep food prices down at this difficult time, and thereby ensure inflation continues to drop?

[Nigel Huddleston]

I thank the hon. Gentleman for his positive welcome of today’s news about inflation. He is right that it is welcome but we always need to keep an eye on it. I join him in thanking our farmers, who have played a pivotal role in helping food prices to come down. The supermarkets have a role in that area as well. He raises some points that are slightly outside the remit of the Bill, but I assure him I will continue to have conversations with ministerial colleagues and others, and I am sure he will as well. We always listen to the important farming community in this country, who do so much to create employment and provide us with food.

The Bill covers 24 different measures. I will not go through every single one of them, but want to focus on a few key areas. First, I turn to how the Bill rewards work. We all recognise the simple truth that work should pay. We understand how hard many people up and down the country work. This Government want to ensure they are recognised for that because that approach not only benefits individuals and families, but overall growth and the economy. As I mentioned, that is why we have already taken two Bills to cut national insurance through Parliament, but this Bill goes further.

A key measure in the Bill is to increase the high-income child benefit charge threshold from £50,000 to £60,000. In addition, the rate of the charge will be halved, so that individuals continue to receive child benefit until one household member earns £80,000, taking 170,000 families out of paying this tax charge. These changes are a well-earned reward for working families up and down the country and put pounds back into parents’ pockets.

[Sammy Wilson (East Antrim) (DUP)]

While the changes in the child benefit allowances are important, especially helping parents who want to get into work and have their children looked after, does the Minister accept that one of the biggest impacts of the Budget on people who are working is the way in which they are being dragged into higher tax rates because thresholds have not been raised? That is having a huge disincentive effect on working families.

[Nigel Huddleston]

The right hon. Gentleman will be aware that, back in 2010, the tax-free allowance was, I think, £6,475. Actions taken by this Government since then have increased the tax-free allowance to more than £12,500, a significant real-terms increase, which means that take-home pay is higher than it otherwise would have been. When taken in combination with other measures, it is a really important move.

Furthermore, I am sure the right hon. Gentleman would not want to detract from the significant changes in national insurance, which have put money back into people’s pockets. We have eliminated by a third a whole category of taxation—national insurance—and that will help working people in this country as well.

[Richard Fuller (North East Bedfordshire) (Con)]

Just to reinforce this point about the increase in thresholds, the Minister says that it has been a significant real-terms increase, but it is actually a 21% increase, which is very significant indeed. My question is on the part of the HICBCs that were announced in the Budget but that he did not quite mention, which was the plan from 2025-26 to base the benefit on the household budget rather than the individual budget. Can he just reassure the House that His Majesty’s Revenue and Customs will be up to speed to be able to implement that part of what the Chancellor has outlined?

--- Later in debate ---

[Nigel Huddleston]

I thank my hon. Friend for his question, but he has jumped ahead to a later part of my speech. I will get on to that point in a moment, because the movement to a household budget is an important part of the announcements.

I should just reiterate the first points on the changes that we have made. Overall, we estimate that 485,000 families will gain an average of £1,260 in child benefit in 2024-25 from these changes to HICBC. And, of course, what is good for families is also good for the economy at large, as my hon. Friend pointed out. The Office for Budget Responsibility estimates that, through these child benefit changes, the economy will gain additional hours work equivalent to around 10,000 full-time equivalents by 2028-29. Going forward, we want to ensure that the child benefit system fairly rewards families in all their diversity, including those who, for example, have only one working parent. The Government will end the unfairness, for example, of single earner families in the child benefit system by administering the HICBC on a household rather than an individual basis by April 2026. We shall be consulting on this in due course, as my hon. Friend quite rightly highlighted. This is something, we know, that many people have been calling for.

[Nigel Mills (Amber Valley) (Con)]

Can the Minister give us an indication of what level of household income the Treasury has in mind for that consultation? I presume that it will be much higher than £80,000; otherwise, it would be a more punitive situation. Will it be £100,00 or £120,000? What will it be?

[Nigel Huddleston]

I appreciate my hon. Friend’s inquisitiveness, but this is the point of the consultation. We will be having a consultation and I am sure that his views and opinions and those of others will be taken into account.

I shall now turn to how the Bill will drive investment in our economy. We all recognise that investment in the economy is crucial for economic growth. It supports everyone across the country and ensures our competitiveness in international markets. That is why, through this Bill, the Government are taking decisions for the long term to support that investment. For example, our creative industries contributed £126 billion in gross value added in 2022 and supported more than 2 million jobs.

By announcing more than £1billion of new reliefs for the UK’s world-leading creative industries at the spring Budget, we have signalled our commitment to ensuring the sector’s continued growth. For example, we will make current tax reliefs for theatres, orchestras, museums and galleries permanent, at a rate of 45% for touring theatres and touring productions by museums and galleries; 40% for non-touring productions; and 45% for orchestras. That will ensure that our creative industries have the support they need after the unprecedented economic shock of the pandemic.

We will also further support the UK’s independent film sector through a new UK independent film tax credit at a rate of 53% for films with a budget of up to £15 million, which is worth about £80 million a year. This will support the production of UK independent films and, of course, the incubation of UK talent, which is admired around the world. This Government are committed to supporting UK businesses and these measures deliver on that.

--- Later in debate ---

[Neale Hanvey]

Can the Minister not see the perversity of spending Scottish revenue abroad while jobs in Scotland are wilfully put at risk by this Government?

[Nigel Huddleston]

I could not disagree more with the hon. Member’s premise. If anybody has shown support for the sector, this Government have. We have shown huge support for the sector, in an appropriate and proportionate way, while also encouraging the industry to decarbonise. As I said, we are taking fiscally responsible decisions to extend the energy profits levy for one year. We are also providing confidence and certainty to businesses in the sector by legislating for an energy profits levy price floor. That is what is in the Bill. That will effectively abolish the energy profits levy if the six-month average for both oil and gas is at or below a set threshold. Doing so was the sector’s main ask in the 2024 spring Budget, and it could help to unlock around £9 billion in uncommitted investment spend, according to Offshore Energies UK, which welcomed the decision. I am sorry that he feels unable to welcome it as well.

Those measures will ensure that investment in our economy continues to grow. I will now outline some measures in the Bill’s property package. The Bill will cut the higher rate of capital gains tax on residential property from 28% to 24%, encouraging landlords and second home owners to sell their properties, which could increase revenues because there would be more transactions.

[Dr Luke Evans (Bosworth) (Con)]

The capital gains tax cut is very welcome, but will the Minister outline whether it will come into play retrospectively? Hypothetically, if a Labour Front Bencher happened to owe some capital gains tax, would they benefit from a Conservative tax cut?

[Nigel Huddleston]

I think I know where my hon. Friend is heading. Of course I cannot comment on individual tax situations. His point, though, is an important one: everybody should always pay the taxes that they owe. I think that principle is shared across the House. The measure will be implemented from 6 April 2024, so some people may be disappointed that there is no retrospectivity, but as I say, it will make more homes available to purchase for a variety of buyers, including first-time buyers.

We also need to ensure that the property system is fair and working as intended. The Government are clear that where policies are not meeting their policy objectives, we will take action. That is why we are abolishing multiple dwellings relief, a bulk purchase relief in the stamp duty and land tax regime, from 1 June 2024. That follows an external evaluation that found no strong evidence that the relief is meeting its original objective of supporting investment in the private rented sector, and because HMRC has recorded high and clear instances of its abuse. We are also amending rules to ensure that victims of domestic abuse are not unfairly penalised if they wish to buy their first homes anonymously, and that those in difficult circumstances do not face additional barriers to purchasing homes. We will ensure that registered providers of social housing in England and Northern Ireland are not liable for stamp duty land tax when purchasing property with a public subsidy, and exempt public bodies from the 15% anti-avoidance rate.

Finally, I turn to measures that will simplify and modernise our tax system, making it easier to engage with the tax system and closing loopholes that could be used for avoidance. The negative impacts of inefficient, complex taxes on both businesses and the wider economy cannot be overstated. That is why the Government are taking action to ensure that the system works for everyone. As a starting point, we are amending two primary VAT interest provisions in legislation to ensure that they apply to all cases intended by the policy. That will mean that the interest payments that HMRC recovers are correct, and it will save time and resources for HMRC and businesses.

The Government recognise that it is everyone’s responsibility to pay their fair share of tax to support our vital public services, so we are closing another anti-avoidance loophole—one that enables individuals to avoid tax by moving assets abroad via a company. That is one of 200 measures that we have undertaken since 2010 to close loopholes and reduce the tax gap, which now sits at just 4.8%—down from 7.5% under Labour. Yes, that is an inconvenient truth for the Opposition, who recently claimed to be so enthusiastic about tackling tax avoidance yet did not take the actions that we have taken when they were in power. Importantly, Labour failed to support the last Finance Bill, which included further measures to tackle tax avoidance. However, Labour was in good—or, rather, bad—company, because the Lib Dems and the SNP did not support it either.

It is not the first time that we have seen such—how should I put it?—distance between what the Opposition say and what they do. Recently, the Labour party even said that it would support our national insurance tax cuts, but when it came to the vote, I did not see a single Labour MP in the Aye Lobby with the Conservatives. Nor were there any Lib Dems, while SNP Members were in the No Lobby actively voting against tax cuts for their constituents.

The Government are getting on with delivering on our plan to cut taxes, grow the economy and boost investment, but the Labour party would put all that at risk and send us back to square one. Instead of taking the responsible decisions to back businesses, the Labour party wants to saddle them with new regulations. Labour’s so-called new deal for workers is in fact a bad deal for jobs, workers and businesses. The 70 new regulations from the deputy leader of the Labour party and the unions would ban flexible working, disincentivise small businesses from making new hires and unleash waves of low-threshold, zero-warning strikes.

[Sammy Wilson]

The Minister is quite right to point out the dangers of Labour being in charge of finances and the impact that that is likely to have on tax, but does he have the humility to accept that tax is higher under this Government than it has been for decades?

[Nigel Huddleston]

I certainly have the humility to accept and recognise that. Taxes are higher out of the obvious and widely accepted necessity of paying for massive amounts of intervention because of the pandemic and in response to supporting families and businesses through the cost of living challenges. We make no apology for intervening to support lives and livelihoods to the extent that it was necessary. It was absolutely vital that we intervened because not doing so would have been a disaster for the UK economy. However, the general level of taxation, as the right hon. Gentleman is probably aware, is much lower in the UK than in many other countries that also had to significantly increase taxes and Government intervention out of necessity in response to the pandemic. We have much lower levels of taxation than Germany, France, Italy and many other countries. As I said, we had high levels of taxation out of necessity, but we are now in a position to start reducing those levels of taxation out of policy intent and choice, and that is exactly what we are doing.

To conclude, this Finance Bill absolutely rewards hard work, supports our vital industries, boosts the housing market and continues to create a fairer, simpler and more modern tax system. It delivers on the Government’s commitment to prioritise economic growth and will ensure a brighter future for our country. For those reasons, I commend it to the House.

--- Later in debate ---

[James Murray]

I fear that the hon. Gentleman is slightly out of date. Going into the general election, we have set out very clearly our plan to invest in the transition that we need in our energy supply and our economy, and how we would pay for that—through a strengthened windfall tax, alongside prudent investment. He may scoff at what we say about the non-dom tax loopholes, but we are talking about £1 billion in the first year and £2.6 billion over the course of the next Parliament. That money should go to our public services, rather than intentional loopholes allowing some people to get away with paying hundreds of millions of pounds less in tax.

The Conservatives are not just out of ideas, but out of touch with reality. They made that very clear in last month’s Budget, from which this Finance Bill arose. At the end of his Budget speech, the Chancellor made an astonishing £46 billion unfunded commitment—leaving a gaping hole in the public finances—when he pledged to abolish national insurance altogether. Since then, Government Ministers have had countless opportunities to row back from or U-turn on that commitment, but they have been determined not to. Earlier today, the Prime Minister had three chances to rule out cuts to the NHS, cuts to the state pension or tax rises to pay for his £46 billion unfunded tax cut. Each time, he refused to do so.

[Nigel Huddleston]

Will the hon. Gentleman give way?

[James Murray]

I will in a second. It is quite astonishing that the Conservatives are content to go into the general election with a £46 billion black hole in their plans, and that they refuse to say whether that £46 billion commitment will be funded by tax rises elsewhere or cuts to spending. I give way to the hon. Gentleman, so that he can confirm exactly how the Government will pay for that £46 billion black hole.

[Nigel Huddleston]

I very rarely intervene from the Dispatch Box, but I cannot help myself this time. The hon. Gentleman and I have had multiple conversations about this. He cannot differentiate between an aspiration and a policy commitment. His £28 billion was a policy commitment; what we have laid out is an aspiration. They are two different things.

As for the hon. Gentleman’s scaremongering about the possible hit to pensions or the NHS, he knows full well that those suggestions are absolutely not true, because national insurance does not wholly pay for health, benefits, or indeed pensions. He is either scaremongering or exhibiting complete and utter financial illiteracy. Total spending on the NHS is over £160 billion, and welfare spending is over £260 billion, massively dwarfing the total amount raised by national insurance. He either does not understand that, or is irresponsibly scaremongering, because he has known for a long time that national insurance and other payments are topped up by general taxation. He should know better.

[James Murray]

I thank the hon. Gentleman for his mini-speech. I feel I may have touched a nerve. He talks about people being scared; yes, I think people are scared when they hear the Government making a £46 billion unfunded spending commitment and not saying how they will pay for it. When the previous Prime Minister made an unfunded tax cut commitment of a similar order of magnitude, we know what havoc that caused in the economy, and people are still paying the price in higher mortgage payments and rent payments. I will just say to the hon. Gentleman that I gave him a chance to rule out cuts to the NHS or the state pension, or tax rises elsewhere, to pay for this black hole. I am not quite sure if he did that—maybe he has not got the line from his boss in No. 10 Downing Street—but the truth is that until the Government rule those things out, people will rightly worry about the impact his unfunded commitment will have on the economy.

The pledge the hon. Gentleman was speaking about sounds like exactly the sort of pledge that the right hon. Member for South West Norfolk (Elizabeth Truss) would approve of, because it comes to almost exactly the same amount as her Government’s unfunded tax cuts. Of course, the previous Prime Minster has been touring the TV studios and talking to newspaper journalists in recent days, saying, among other things, that people who claim that she crashed the economy are

“either very stupid or very malevolent”.

I wonder if the Minister would like to intervene to say whether he shares that view. No? He is not leaping to his feet now. I would have thought he would; I would have thought that Treasury Ministers would want to put as much distance as possible between themselves and the previous Prime Minister. Instead, with their £46 billion unfunded commitment, they seem determined to be a tribute act. Frankly, whatever the previous Prime Minister says, people across Britain know what impact her time in office is having on all of us, as we face higher mortgages and higher rents as a direct consequence of her economic recklessness.

That is the context in which we are debating this Finance Bill. The context is one of a Government who are out of time, out of ideas and out of touch with reality, and of a country that is feeling the impact of 14 years of Conservative economic failure. Even a simple clause such as clause 2, which sets the main rates of income tax, highlights the impact on ordinary people of decisions taken by this Government. Although the basic and higher rates of income tax are unchanged by this Bill at 20% and 40%, the tax burden on working people is rising as a result of the income tax personal allowance and the higher rate threshold being frozen from 2021-22 to 2027-28. Those tax thresholds would ordinarily have risen this April, but instead they are in the middle of a six-year freeze. According to the Office for Budget Responsibility, which I assume the Minister has respect for, these freezes will create 3.7 million extra taxpayers by 2028-29 and mean that 2.7 million more people will be paying the higher rate.

The truth is that, even taking into account any reductions to national insurance rates, the freezes in thresholds and the rises in council tax mean that by the end of the forecast period, the average family will still be £870 worse off. As the Resolution Foundation noted at the time of Budget, despite the reductions in national insurance, there will still be a net rise of £20 billion a year by 2028-29 in personal taxes. It pointed out that those over the state pension age, who do not benefit from national insurance cuts, will be particularly badly hit, and will face an average tax rise of £960 a year. The reality has been summed up by Paul Johnson, the director of the Institute for Fiscal Studies, who said following the Budget:

“This remains a parliament of record tax rises.”

That is the record of the Conservatives in government.

Draft Major Sporting Events (Income Tax Exemption) (2024 UEFA Champions League Final) Regulations 2024

Nigel Huddleston Excerpts

Tuesday 16th April 2024 General Committees

[The Financial Secretary to the Treasury (Nigel Huddleston)]

I beg to move,

That the Committee has considered the draft Major Sporting Events (Income Tax Exemption) (2024 UEFA Champions League Final) Regulations 2024.

It is a pleasure to serve under your chairmanship, Sir Robert.

The draft regulations will provide an income tax exemption for UEFA-accredited overseas individuals who participate in the 2024 UEFA champions league final at Wembley stadium in June. The exemption will apply to any UK income that a UEFA-accredited individual receives for participating in the event, or for duties and services performed in connection with the final.

The Government recognise the great benefits and rewards that all sports bring to this country. I championed that in my previous role as Minister for Sport at the Department for Culture, Media and Sport, and I am pleased that another former Minister for Sport, my hon. Friend the Member for Chatham and Aylesford, who was equally a champion of major sporting events, is present in Committee. Indeed, such events generally receive cross-party support.

The UEFA champions league final is UEFA’s flagship club football competition, where the world’s greatest football players demonstrate their elite skill. The home of football, Wembley stadium, is one of the greatest stadiums in the world. I am therefore greatly looking forward to the final there in just a few months’ time. Nearly 90,000 people will attend in person, and more than 100 million people will watch on televisions across the world. The UEFA champions league final being hosted in the UK will have a range of benefits: inspiring a new generation of young footballers; bringing communities together; and boosting the UK economy. That reflects the importance of promoting grassroots-level football, which is a key priority of the Football Association.

Back in 2020, Wembley stadium was awarded the right to host the 2024 UEFA champions league final. That was part of the Government’s wider strategy to make the UK an attractive location for world-class sporting events. Successive Governments have provided income tax exemptions for hosting major sporting events. The UK has a long track record of showcasing its excellence as a host of major events, including the UEFA champions league finals in London in 2013 and in Cardiff in 2017. More recently, statutory tax exemptions have been provided for events including the UEFA men’s and women’s Euro football championships in 2021 and 2022, the 2022 Birmingham Commonwealth games and the 2023 women’s finalissima football match. All, again, received cross-party support.

I am therefore confident that Members will agree that it is in keeping with the Government’s policy and precedent to provide an exemption for the 2024 UEFA champions league final. Furthermore, as in this case, such an exemption is often a requirement of the bidding process. Tax exemptions are reserved for exceptional events, and I am sure that the Committee will agree that the 2024 UEFA champions league final is a fine example of that.

The draft regulations make use of the powers that were introduced in the Finance Act 2014, providing a UK income tax exemption through secondary legislation. This exemption will apply to non-resident players, officials and individuals designated by UEFA on income earned in connection with the final. The exemption will run from 28 May to 2 June 2024, allowing a short period either side of the event, so that the exemption covers any other duties performed in connection with the final. Being exposed to taxes in two countries is administratively difficult to deal with, and consideration would need to be given to the application of withholding taxes, filing self-assessment tax returns and understanding the terms of existing double taxation treaties. I therefore have no doubt that the exemption will be welcomed.

The income tax exemption for the 2024 UEFA champions league final further supports our ongoing commitment to make the UK a global leader for hosting world-class major sporting events. I commend this draft statutory instrument to the Committee.

--- Later in debate ---

[Nigel Huddleston]

I join the hon. Gentleman in wishing the best of luck to England’s teams. He made an important point about the significant achievement of hosting the Euros again in 2028, which shows that we can host such things. We can host such events extremely well, and they are very good for the UK economy, being a good return on investment. It is clear that there is support for the draft regulations across the Committee.

The 2024 UEFA champions league final will promote football at home and abroad. It will be a highlight of the sporting calendar and will be guaranteed to delight football fans across the globe. Hosting the event will strengthen the UK’s proud record of hosting sports and leisure events of that scale, enhancing our reputation across the world. For those reasons, I commend the legislation.

Question put and agreed to.

HMRC Self-Assessment Helpline

Nigel Huddleston Excerpts

Wednesday 20th March 2024 Commons Chamber

[Mr Speaker]

You have good news, Minister.

[The Financial Secretary to the Treasury (Nigel Huddleston)]

Thank you, Mr Speaker.

I thank the hon. Member for Ealing North (James Murray), and others, for raising the important issue of HMRC’s customer services and its plans to provide better services for taxpayers.

As Members probably know, His Majesty’s Revenue and Customs has announced that it is halting planned changes to its helplines, but aims to encourage more taxpayers to self-serve online. It has listened to the feedback and recognises that more needs to be done to ensure that all taxpayer needs are met, while also encouraging those who can to make the transition to online services. Making the best use of online services allows HMRC to help more taxpayers, and to get the most out of every pound of taxpayers’ money by boosting productivity. HMRC helpline and webchat advisers will always be there for taxpayers who need support because they are vulnerable or digitally excluded, or have complex affairs. I recognise that such reassurances were not communicated clearly enough yesterday.

Of course, the pace of this change needs to match the public’s appetite for managing their tax affairs online. The changes in the self-assessment VAT and PAYE helplines announced by HMRC will therefore be halted while it engages with stakeholders, which means that the phone lines will remain open as usual. HMRC will now work with stakeholders—including me—while continuing to encourage customers to self-serve and gain access to the information that they need more quickly and easily by going online or to the HMRC app, which is available 24/7.

[James Murray]

I thank the Minister for his response, but the question that I am tempted to ask is, “Who on earth is running the Treasury?”

This morning, just after we had requested the urgent question, we found out that the Chancellor had told HMRC to “pause” this change. That is a U-turn of quite extraordinary speed and indignity, following HMRC’s announcement yesterday that it would be permanently closing its self-assessment helpline altogether for half the year, from April to September. This morning a Treasury source said

“ministers have halted this change immediately”,

implying that those Ministers had been taken by surprise by the announcement. Can the Minister tell us whether any Treasury Ministers had any involvement in the decision announced yesterday, or whether HMRC’s announcement was made without any ministerial involvement?

In announcing the closure of the helpline, HMRC’s second permanent secretary and deputy chief executive said that the changes would

“allow our helpline advisers to focus support where it is most needed—helping those with complex tax queries and those who are vulnerable and need extra support.”

Can the Minister confirm that HMRC’s plans to help those who are vulnerable and need extra support are now in tatters after the Chancellor’s chaotic U-turn? I note that reports of the Chancellor’s position refer to a “pause” of the change, rather than a scrapping of it altogether. Can the Minister confirm that the self-assessment helpline will now remain fully open this year? If this plan is merely paused, will HMRC still be looking at months-long periods of closure of the helpline in the future?

It is clear that yesterday’s announcement of the helpline’s closure came not as part of a comprehensive, orderly or effective plan to help customers to move online, but rather as a panicked response to the collapse of HMRC’s service levels to an all-time low; and it is clear from today’s chaotic U-turn that this Government are fundamentally unstable, and have given up on serious governing.

[Nigel Huddleston]

I am sure the hon. Member is aware that HMRC is a non-ministerial Department. Ministers set strategy and work closely with the Department on operations and communications. It is important to recognise that 67,000 people work for HMRC. They go to work every day and try to do the right thing, and it is important to recognise that many people there work very hard.

The overall strategy is absolutely right and I completely support it, and I will give the hon. Member an example of why we need to encourage and support the move to online services. In 2022-23, HMRC received more than 3 million calls on just three things that can easily be done digitally: resetting online passwords, getting one’s tax code and getting one’s national insurance number. That involves almost 500 people working full time to answer just those calls, and such resources could be redeployed. The hon. Member can be reassured that those who are not digitally savvy and those with difficulties will always be able to access services, including telephone services.

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Harriett Baldwin (West Worcestershire) (Con)]

May I thank the Financial Secretary and the Chancellor for listening to the howl of pain that came from ordinary taxpayers when they saw the announcement yesterday? Those who contact the HMRC hotline are the most law-abiding, tax paying people across this land.

This morning, the Treasury Committee has published more data showing that it is increasingly difficult to contact HMRC by telephone. While I fully endorse what the Minister has just said about the long-term strategy to move people online, it cannot be done by randomly shutting down HMRC’s telephone lines.

The Minister had an excellent digital track record in the private sector before he came into Parliament. May I urge him to use that experience to make this much more of a gradual transition for those law-abiding citizens of ours?

[Nigel Huddleston]

I thank my hon. Friend and the Select Committee for their work in this area. I know that HMRC customer service has been an area of focus for her and others for some time, and we appreciate the input. I recognise that she acknowledges the potential opportunities and the upside to encouraging more people to go online, but the point she makes is really important. HMRC has taken the feedback with good grace, because it is important that we move at the speed at which the public are willing to move. Of course, some people are not willing or able to move to purely online services.

I am sorry for not responding earlier to the hon. Member for Ealing North (James Murray) on whether the telephone lines will stay open. Yes, of course they will.

[Mr Speaker]

I call the SNP spokesperson.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

This is absolute chaos. The proposal to permanently close the self-assessment helpline for half the year was truly half-baked and irresponsible, as were the planned restrictions to the VAT helpline. The reversal is welcome, but the fact that the announcement was made at all highlights the disconnect at the heart of HMRC’s customer operations. As the Federation of Small Businesses has pointed out,

“customer service levels are at an all-time low”—

a view backed up by the Public Accounts Committee. At a time when the Chancellor’s policies are fiscally dragging more people into PAYE, the proposal was typically tone deaf to people’s needs.

Fran Heathcote of the PCS union has said that

“the combination of low-pay and micro-management”

is “rife across the whole” of HMRC’s customer service department. The Minister said that HMRC is a non-ministerial Department, but we know that it has been told what to do by the Chancellor overnight. When did the Government get notice of the announcement? Was it a reaction to the Chancellor’s decision to cut HMRC’s budget by £1.6 billion next year? Will he now ensure that the cut is reversed and order HMRC to recruit more customer service staff, and will he now instruct HMRC to make the reversal permanent?

[Nigel Huddleston]

As I outlined a few moments ago, I think we can all appreciate that in order to serve customers, and particularly those who most need support, we need to ensure that those who do not need to go online have alternative channels—by the way, the customer service levels are higher in online channels—and the use of the app, which I encourage all individuals to use. Those who can go online will find a very effective and efficient service, so this is absolutely the right strategy and one that I completely and utterly support. We have also previously had a trial closure of the lines, and the report released yesterday showed that it worked quite well.

The hon. Gentleman also asked about redeployment. HMRC is proactive in notifying people who, for example, do not need to provide a self-assessment form. I think more than 1 million people were notified last year that they did not need to do so. Following other changes in Government policy, we have also communicated that those on high incomes—up to £150,000, for example—but do not have complex tax affairs do not need to provide a self-assessment return. There is a broad package going on here to enhance and improve customer service, but we recognise that many people like and would prefer a telephone service.

[Miss Sarah Dines (Derbyshire Dales) (Con)]

Despite extensive Government investment in rural broadband in my constituency, there remains a lack of connectivity, with small businesses, the elderly and the vulnerable still having difficulty going fully online. What can the Minister do to ensure that nobody will be left behind in Derbyshire Dales?

[Nigel Huddleston]

My hon. Friend makes the really important point that there are still people in this country, including in her constituency, who are not digitally aware or who are digitally excluded for a variety of reasons. That is why an important part of our strategy is to ensure that those who are digitally excluded, and those who are vulnerable or have particularly complex affairs, can always reach a human being.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

This is another chaotic Government U-turn, with the Chancellor taking the decision this morning to scrap plans to close HMRC phone lines less than 24 hours after the measures were announced. A Treasury source admitted this morning that closing HMRC’s helplines would be to

“the detriment of the general public and the vulnerable who need access to the helplines to support them with tax matters. ”

This is part of a wider malaise within Tory broken Britain where many of my Slough constituents cannot speak to a doctor when they want to, cannot register for an NHS dentist and much worse besides. So why was this decision taken in the first place?

[Nigel Huddleston]

I mentioned in my opening comments—I will stress it again because it is important that nobody scaremongers about this—that it was never intended, and never would have been the case, that the vulnerable, the digitally excluded or those with complex affairs would be unable to access these services, even with the proposals set out yesterday. On that particular point, the hon. Gentleman is just wrong.

[James Sunderland (Bracknell) (Con)]

I am grateful to the Minister for his statement, which I welcome. Last September, in this very place, I raised the issue of heavy fines being imposed on self-employed constituents for late submission of self-assessment forms, even though no moneys were owed. I met the Minister in post at the time, but will the current Minister please write to me with an update on progress?

[Nigel Huddleston]

I thank my hon. Friend for raising this matter. I reiterate that there is a very good reason why HMRC’s structure and relationship with Government is as it is, because it would be inappropriate for Ministers to interfere with individual tax affairs. However, I would be more than happy to raise his point with HMRC and respectfully ask that it pays it due attention. Of course, the Government set broader policy.

[Helen Morgan (North Shropshire) (LD)]

As a former financial controller of a small business in a rural place, I have used those helplines extensively, not least in sorting out disputes when HMRC has got its data wrong. Given that our own experience is that the website’s process is byzantine, that the waits on the phone lines are inordinately long, and that £36 billion of tax goes uncollected by HMRC every year, how can anyone have any confidence that the Treasury is working effectively?

[Nigel Huddleston]

Very simply, we have one of the lowest tax gaps reported in the world, at about 4.8%, precisely because of the clarity of the tax system and the efficiency of HMRC in gaining the tax that is owed. Of course there are customer service challenges, and I am having conversations with HMRC about that. HMRC is also held to account in the Chamber, the Treasury Select Committee and elsewhere, as appropriate. It is important that we recognise that HMRC received 38 million telephone calls and 16 million pieces of correspondence in 2022-23. If it were a private sector business, we can see how it would make sense strategically to move, where appropriate, as much of that activity as possible online, where it can be dealt with more appropriately and often more quickly.

[Caroline Nokes (Romsey and Southampton North) (Con)]

The Women and Equalities Committee, which is currently carrying out an inquiry on the rights of older people, this week met Independent Age and a range of stakeholders in Andover. They made the point that older people need to be able to access all services on the telephone, as people who are disabled or have a visual impairment find online services difficult. To be able to communicate effectively, people who are hard of hearing need websites with a British Sign Language overlay. Independent Age and the stakeholders I met were horrified at yesterday’s announcement on the closure of the helpline.

What consultation has there been with my hon. Friend the Member for Mid Sussex (Mims Davies), in her expanded role as Minister for Disabled People, on the potential impact of these changes? When Members of Parliament deal with HMRC on constituency casework, it now tries to push us into using the telephone rather than email. Can the Financial Secretary assure me that vulnerable people will still be able to use telephone services? Will he comment on the contradiction between how Members of Parliament and the public are dealt with by HMRC?

[Nigel Huddleston]

I assure my right hon. Friend that we are having live conversations with HMRC about how it communicates with Members of Parliament on behalf of our constituents. Some Members tell me that they would prefer a telephone call, whereas others would prefer email. It is important that we have both. I am more than happy to communicate views and opinions from across the Chamber on that point. I am well aware that one of the biggest areas of concern about yesterday’s announcement, and one of the reasons why the feedback has been so loud, is that vulnerable people, including those with disabilities, might not be helped. It was never the intention or the plan that such people would be unable to access online, webchat or other channels.

[Tonia Antoniazzi (Gower) (Lab)]

The Minister has spoken about members of the public who are willing and able to access services online. Members have to complete our own self-assessment form. I am willing and able, but I still need access to a telephone helpline. He said that 500 people are needed to answer the same three questions, which obviously cannot be handled by the online system. Following this announcement, is he confident that HMRC has the digital tools necessary to cater for more than 12 million self-assessment taxpayers?

[Nigel Huddleston]

I need to correct the hon. Lady, as the vast majority of the points I raised could be handled online, including through the app. One of the things we must do is communicate far more clearly. A fair point has been raised in the Chamber today, and I will continue to discuss it with HMRC, because there are clearly some challenges with communicating what is available, where help exists and so on, but there is a wealth of information on the digital offerings, particularly the app, and I encourage people to adopt them, where possible. The hon. Lady makes a valid point that people who cannot adopt them will need other help, and we are listening.

[Sir Julian Lewis (New Forest East) (Con)]

It is clear that HMRC made a serious mistake, and the Government acted commendably quickly in intervening to put matters right. I am sure they will now take a close interest in what happens next. As a matter of policy, will the Minister ensure that, whatever the future holds, it will not be anything so sudden or brutal, and that there will be a trial period before anything so dramatic is implemented across the board?

[Nigel Huddleston]

As I mentioned a few moments ago, there has been a trial closure of telephone services. The recently reported results show that the trial worked quite well. As we heard overnight and are hearing again in the Chamber today, the important challenge is that the confidence behind that has not been effectively communicated. The reassurances that I personally received on what will happen to help those who are not able to access online services—including the disabled, those without digital access and those with particularly complex cases—were not communicated. That is important to making sure that, as HMRC moves forward and policy is developed, we move at a pace with which people are comfortable.

[Sammy Wilson (East Antrim) (DUP)]

I hope that HMRC’s screeching U-turn is a result of the Minister’s action. If it is, I congratulate him on stepping in so quickly. Does he agree that, at a time when more and more people are being dragged into complex tax returns because of fiscal drag, when 1 million people had their calls to HMRC unanswered in January and when a record number of people are putting in their tax returns late because they cannot get information, HMRC should not have adopted such a policy? Will the Minister give us an assurance that this is not temporary and that whatever help income tax payers require to pay their tax will be made available?

[Nigel Huddleston]

I give the right hon. Gentleman an assurance on the latter point. As I have outlined several times today, I think we can all recognise that the move to digital, where appropriate, will relieve the burden on the people answering telephone calls and on some other services, allowing them to deliver precisely the end goal that he describes. Simplifying the tax system is a goal of Government policy. I gave an example of people on high incomes with relatively simple tax affairs—those who pay through PAYE, for example—and we are trying to remove as many of those people as possible from self-assessment. I completely understand the right hon. Gentleman’s points.

[James Wild (North West Norfolk) (Con)]

Although decisions on individual tax cases are rightly managed independently by HMRC, political and public pressure saw this ridiculous decision squashed. What steps will Ministers take to improve the accountability and performance of HMRC?

[Nigel Huddleston]

There are a variety of channels and tools, including my ministerial oversight. The Treasury Select Committee and other bodies also play an important part. I am not suggesting in any way, shape or form that I am removing myself from responsibility for HMRC, as I have ministerial oversight. If colleagues have concerns, they can always raise them with me. It is my job to raise those concerns with HMRC.

[Chris Stephens (Glasgow South West) (SNP)]

I refer to my entry in the Register of Members’ Financial Interests, as I chair the Public and Commercial Services Union parliamentary group.

Does the Minister accept that one of the more disgraceful aspects of this episode is that neither the trade unions nor the staff appear to have been consulted prior to yesterday’s announcement? Does he accept that this is no way to conduct industrial relations or to deal with staff? How does he see yesterday’s announcement in the light of the Public Accounts Committee’s comments that the Department has to improve its ability to reach out to taxpayers and that it needs additional resources? Why are the Government now restricting customer access to the Department?

[Nigel Huddleston]

HMRC and I have heard and respect the views of the PAC and other bodies, including their recommendations and suggestions for improvement. Of course, many of these bodies suggest that the continuing move towards digital and online is an important part of that process. As I have said, I do not have day-to-day operational responsibility for HMRC, but I do have oversight. I proactively requested a meeting with the unions several weeks ago, and that is what I have tended to do in all my ministerial roles.

[Sir Christopher Chope (Christchurch) (Con)]

This is a welcome U-turn, but does my hon. Friend accept that one of the problems is HMRC’s chronic lack of productivity? Is that not made worse because so many people are working from home?

[Nigel Huddleston]

My hon. Friend is correct that a focus on productivity is key, and I can assure him that these are exactly the kinds of conversations that I am having. The Chief Secretary to the Treasury is leading a cross-Government review of productivity. HMRC staff are required to work in the office for 40% of the time. I have asked HMRC to assess and monitor the productivity of staff who are working from home versus staff working in the office, and there is very little difference. Because of the concern expressed by my hon. Friend and others, I will keep an eye on it.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

The reprieve is welcome, but if we are to keep these helplines open, can we at least resource them properly and make them work? I spoke to a chartered accountant in my constituency this morning, and he tells me that when he recently phoned HMRC with a complex query on behalf of a client, it took 40 minutes to get an answer. When the phone was answered, there was an acknowledgment of the problem. He suggested that the answer might lie in his client’s wife’s data being incorrectly ordered, at which point he was told that the staff were allowed to handle only one case per call, and that he would have to hang up and phone back, with another 40-minute wait for an answer. Surely that is no way to treat a customer.

[Nigel Huddleston]

I thank the right hon. Gentleman for raising that point, and I am happy to raise it with HMRC.

[Alison Thewliss (Glasgow Central) (SNP)]

I am regularly contacted by constituents who have had poor services from HMRC, as I am sure many of my colleagues are. These people are pretty certain that they would still be waiting had they not got their MP involved. My constituent Mr McCall retired to care for his terminally ill wife in 2021, but has since been chased repeatedly by HMRC to provide a tax return for 2022-23. He does not use email and has described the diabolical experience he has had with the phone line; he waited 50 minutes for an automated voice, and the line then went dead. Does the Minister accept that that service level is not acceptable at all, and things must improve? Would he like to take the opportunity to apologise to Mr McCall for the distress that HMRC has caused him?

[Nigel Huddleston]

Yes, I am sorry to hear about those circumstances for the hon. Lady’s constituent. As I said, I have to be careful given the need to keep at arm’s length in individual cases, but she also raises a broader policy point. A lot of training and work goes on. I repeat that some 60,000 people work for HMRC, many of whom are dedicated, hard-working and well-trained individuals, and they often do a thankless job, but she makes a valid point, and I will happy raise that issue. I spoke incorrectly a few moments ago, so may I take the opportunity to correct what I said, Mr Speaker? HMRC staff are required to work in the office 60% of the time, not 40% of the time.

[Wendy Chamberlain (North East Fife) (LD)]

The Government were forced to extend the state pensions top-ups through to April next year because of unacceptable delays on the Department for Work and Pensions/HMRC helpline for that issue. The Minister has mentioned that a review will take place; will that helpline be in its scope? It is a concern to many, many constituents.

[Nigel Huddleston]

As I say, I have ongoing engagement with HMRC. It is operationally independent, but I do have some oversight, and ministerial guidance is appropriate. I appreciate all the comments made by hon. Members today. These will be live conversations, and HMRC is listening to the conversations today. I will be happy to raise with it the points that she makes.

[Jim Shannon (Strangford) (DUP)]

First, let me thank the Minister for a positive response, and for trying to solve the problems; we appreciate that. Constituents have told my office about their struggle to get through to HMRC on the phone lines. There is no doubt that people still rely on services that allow them to speak to an individual. That is so important, as it is for us as MPs. We had 1 million calls unanswered in January alone, which illustrates clearly the problem that the Minister is trying to address. Does he not see that there must be an enhanced service for all of the United Kingdom of Great Britain and Northern Ireland, to ensure that all calls are answered and dealt with? The better option of a personal phone call is right, and we need a drastic change to be made.

[Nigel Huddleston]

It is important that HMRC commands respect—to a broad degree, it does—across the House and among our constituents, because that is how we can ensure that we comply with tax requirements. Where there is confusion, uncertainty or a valid question, it is important that people can get help, advice and support. For some people, it is appropriate to go online to get that, but that is not the case for everybody. As I said, the comments made today are very much appreciated. I suspect that the hon. Gentleman will recognise that, as I have said many times, it is important that all of us encourage and support the digitisation of these services, and the adoption of the app by our constituents, because that will help ensure that the time available is focused on those who most need help and support.

Royal Assent

[Mr Speaker]

I have to notify the House, in accordance with the Royal Assent Act 1967, that His Majesty has signified his Royal Assent to the following Acts:

Supply and Appropriation (Anticipation and Adjustments) Act 2024

National Insurance Contributions (Reduction in Rates) Act 2024

Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Act 2024

Bishop’s Stortford Cemetery Act 2024.

Oral Answers to Questions

Nigel Huddleston Excerpts

Tuesday 19th March 2024 Commons Chamber

[Rachel Hopkins (Luton South) (Lab)]

12. What recent assessment he has made of the potential impact of his tax policies on living standards.

[The Financial Secretary to the Treasury (Nigel Huddleston)]

Thanks to the combined impact of national insurance cuts and above-inflation increases to thresholds since 2010, an average worker on £35,400 in 2024-25 will pay over £1,500 less in personal taxes than they otherwise would have done. These national insurance contribution cuts were possible due to the significant progress we have made in combating inflation.

[Paul Blomfield]

I heard what the Minister has to say but does he not recognise the OBR’s assessment of the interplay between the Government’s threshold changes and NICs? The OBR concludes that for every 5p gain per year there is a 10p loss, particularly for those on lower wages. Does he accept the OBR assessment?

[Nigel Huddleston]

I am sure that if the hon. Gentleman looks carefully, he will see that the Government have demonstrated their commitment to supporting the most vulnerable in society. He will also have heard my hon. Friend the Member for North East Bedfordshire (Richard Fuller) explain the circumstances as to why we have higher taxes than we would desire. If the hon. Gentleman is telling me that Labour party policy is to change the thresholds, perhaps he can have that conversation with the shadow Chancellor, who can explain how she would pay for that.

[Dan Carden]

The OBR has said that this will be the worst Parliament on record for living standards and the only one in which they have fallen: people are poorer after 14 years of this Government. We do not need fiscal tweaks; this economy needs renewal. It needs to bring in investment on a major scale, and a new age of education, training and employment in the real economy. My constituents cannot afford to wait while the Tory party looks for its polling fortunes to change. Have we not now reached the point where the best thing for the economy is a general election?

[Nigel Huddleston]

I completely disagree with the hon. Gentleman’s explanation. Not only will I repeat that our constituents completely understand the difficult global circumstances, with the pandemic and the cost of living challenges following the invasion of Ukraine, but I can say that we have grown faster since 2010 than many other major economies, and the IMF forecasts that we will grow faster than Germany, France, Italy and Japan. In the year to the third quarter of 2023, real household disposable income per person was around £1,100 higher than the Office for Budget Responsibility expected in its spring Budget 2023 forecast. We have turned a corner, and the best thing to do is to stick with the Conservatives.

[Rachel Hopkins]

The Minister says that the economy has turned a corner, but households will be £870 worse off on average under the Conservatives tax plan, and they will also be seeing their costs up by £110 a week compared with before the last election. Is the Minister proud of his record?

[Nigel Huddleston]

We are immensely proud of our record since 2010: living standards have increased, and growth is now better than that of many other major economies. Our absolute commitment to protecting the most vulnerable in society was shown recently when we provided an average of £3,400 in cost of living support for each household. We have turned a corner, and the economy is improving. I am just disappointed that the Opposition constantly talk down the UK economy and their constituents.

[Steve Double (St Austell and Newquay) (Con)]

Will my hon. Friend confirm that, following the 4p cut in national insurance that the Chancellor has introduced, the tax take on workers will be the lowest it has been for 50 years? In St Austell and Newquay, two people in a household on average incomes will be paying £1,800 less this coming year than they did last year.

[Nigel Huddleston]

Yes, absolutely, my hon. Friend has pointed out an important point on how we have had a laser focus on reducing the personal tax rates. Furthermore, the measures announced in the autumn statement and in the spring Budget will significantly add to economic activity, contributing about 200,000 full-time equivalent jobs to the economy, and I am sure that the whole House will welcome that.

[Dr Luke Evans (Bosworth) (Con)]

Pensioners can often struggle because they have a fixed income, so I was pleased that the Chancellor stuck with the triple lock last year, guaranteeing an increase of 10.1%. Will the Minister explain how the 8.5% rise that people will be getting in a couple of weeks’ time will make a difference to their living standards?

[Nigel Huddleston]

My hon. Friend makes an important point. It is the case that not only have the measures in the autumn statement and the spring Budget helped workers, but we have also focused on helping pensioners. Those on the new state pension will benefit to the tune of about £900 a year, which is significant, and the national insurance cuts will benefit the average worker —27 million employees—by £900 a year. Therefore, we have implemented a fair and balanced Budget and fair and balanced measures.

[Jonathan Gullis (Stoke-on-Trent North) (Con)]

Families in Stoke-on-Trent North, Kidsgrove and Talke have been supported by this national insurance cut, which means that the average family will be £1,800 a year better off. The freezing of the fuel duty means that motorists will be able to get around without being unfairly charged at the pump. Money from this Government has enabled Stoke-on-Trent to cut bus fares by a third, so that people can travel around. We have had £56 million from the levelling-up fund and £17.6 million for the Kidsgrove town deal, which means that the sports centre will be refurbished and reopened, improving people’s health chances. The Labour party closed it because it could not be bothered to pay a single pound to save it back in 2017. Is it not the reality that we have a clear plan that will help the families of our great constituencies, particularly in Stoke-on-Trent North, Kidsgrove and Talke, while Labour will borrow more, tax us higher and lead us back into recession, just as it did in 2008-09?

[Nigel Huddleston]

I could not agree more with my hon. Friend. This is fantastic, and I think it is a recurring pattern, Mr Speaker. We have positivity, optimism, and confidence in the future of the UK economy from Conservative Members, but absolute negativity from Opposition Members, because they have no plan, they have no clue and they have no hope. We have a plan and it is working.

[Mr Speaker]

I call the shadow Minister.

[Darren Jones (Bristol North West) (Lab)]

Why does the Treasury Minister think people feel worse off after 14 years of Conservative Government?

[Nigel Huddleston]

As I said, we are turning a corner and have therefore made measures to put money back into people’s pockets. I do not think it would come as a surprise to the hon. Gentleman’s constituents, or to those of any Labour Member looking at the Labour Opposition’s recent record, that Labour claimed on the one hand that it was supportive of tax cuts, but last week failed to support those tax cuts when it came to it in Parliament.

[Darren Jones]

The Minister did not answer the question about why the public feel worse off. We on the Labour side of the House know why. He mentions tax cuts, but he does not talk about the freezing of tax thresholds, or indeed about the council tax that is about to be levied on people, not just this year but each year for the next five years. Why cannot he admit that, for every 10p extra in the pound taken from people since 2010, the Government are only now giving back just 5p?

[Nigel Huddleston]

If I am hearing correctly, the Labour Front Benchers are announcing fundamental changes to policy that they have not yet costed. They did not object, as far as I am aware, to any of the measures required to support households and businesses during the pandemic, which necessitated increases in taxation. We are now reducing the level of taxation because we have turned a corner. They did not support that. It is interesting that they say one thing but then do not take action. I think they need to explain to their constituents why they failed to support the tax cuts last week.

[Martyn Day (Linlithgow and East Falkirk) (SNP)]

4. What assessment he has made of the potential impact of the Spring Budget 2024 on levels of block grant funding for Scotland.

--- Later in debate ---

[Karl MᶜCartney (Lincoln) (Con)]

7. What assessment he has made of the impact of raising the high-income child benefit charge threshold on household incomes.

[The Financial Secretary to the Treasury (Nigel Huddleston)]

The Government will raise the point at which child benefit is fully withdrawn to £80,000 from £60,000, and we will raise the high-income child benefit charge threshold to £60,000 from £50,000 from 6 April 2024, taking 170,000 families out of paying the charge. Overall, these changes mean that almost half a million hard-working families will gain an average of £1,260 towards the cost of raising their children.

[Karl MᶜCartney]

These changes are welcome, and they mean that more Lincoln families will receive more support from the Government, as I told the Minister in Lincoln on Friday. Will my hon. Friend confirm when the formal consultation on basing child benefit on household income rather than on individual income will commence, if the civil servants in the Treasury will let him do it?

[Nigel Huddleston]

I thank my hon. Friend. It was a pleasure, as always, to meet him in his constituency on Friday, where we discussed this matter and many others. The Government will launch a consultation in due course on how to end this unfairness by administering the HICBC on a household rather than an individual basis. Doing so would require significant reform of the tax system, as our tax infrastructure does not currently have a mechanism to consider household income, but the Government plan to end the unfairness for single-earner families in the child benefit system by administering the HICBC on a household rather than an individual basis by April 2026.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for that. Child benefit income is an integral part of how families make their money last through the whole week. If there are any changes that will reduce it in any way, is it the Minister’s intention to ensure that those who have questions, difficulties or concerns have their concerns and wishes taken on board? It is really important that those facing financial changes can cope with the changes to come.

[Nigel Huddleston]

I thank the hon. Gentleman. It is precisely because of the complexities involved that we will have the consultation. I am sure that his views and those of his constituents will be warmly welcomed in that.

[Simon Baynes (Clwyd South) (Con)]

8. What fiscal steps his Department is taking to help increase the level of business investment.

--- Later in debate ---

[Helen Morgan (North Shropshire) (LD)]

14. What recent assessment he has made of the impact of his income tax policies on pensioners.

[The Financial Secretary to the Treasury (Nigel Huddleston)]

The Government have nearly doubled the personal allowance since 2010, and in 2024-25 it will be more than 20% higher in real terms than if it had been uprated by inflation since 2010-11. The personal allowance is currently set at a high enough level to ensure that pensioners whose sole income is the full rate of the new state pension, or the basic-rate pension, do not pay any income tax.

[Helen Morgan]

I have been contacted by pensioners in my constituency who get a full state pension plus protected payments from the old scheme. The increase in their pensions in line with inflation has put them over the personal allowance threshold for paying income tax, which has eaten away at that increase. Was it the Minister’s intention in the Budget to drag pensioners into paying income tax?

[Nigel Huddleston]

As I have outlined, and as the Resolution Foundation and others have pointed out, pensioners have gained about £1,000 on average as a result of the Government’s decisions since 2010 to increase thresholds. Some pensioners rely solely on the state for their incomes, and we are supporting pensioners through a variety of other measures: not only the triple lock but pension credit and cost of living support. Pensioners across the country will benefit from the 8.5% increase coming in April.

[Dame Andrea Jenkyns (Morley and Outwood) (Con)]

I welcome the recent tax cuts. We need to ensure that those who work hard and do the right thing are rewarded in their old age. Can the Treasury please stop allocating funds to France, which is clearly not stopping the boats, stop extortionate amounts being spent on hotels for illegal migrants, and reduce the foreign aid budget? Maybe then we can give even more to our pensioners.

[Nigel Huddleston]

My hon. Friend will be well aware that Government Members are implementing measures to tackle the very problems she outlines while turning the corner in the economy and doing everything we can to put more money back in people’s pockets, whether workers or pensioners.

[Nickie Aiken (Cities of London and Westminster) (Con)]

20. What assessment he has made of the potential merits of reintroducing tax-free shopping for international visitors.

[The Financial Secretary to the Treasury (Nigel Huddleston)]

As set out at the spring Budget, we are considering the findings of the Office for Budget Responsibility’s review of the original costing of the withdrawal of tax-free shopping, alongside industry representations and broader data. The Government welcome further submissions from stakeholders in response to the OBR’s findings as we keep all taxes under review.

[Nickie Aiken]

Last week, the OBR informed the Treasury Committee that it has not assessed the Treasury’s forecast that it would cost £900 million to extend tax-free shopping to EU visitors. The OBR has also failed to support the Treasury’s assumption that EU visitor behaviour and costs can be extrapolated from assessed non-EU data. The UK retail industry firmly believes that it will cost as little as £50 million to reintroduce tax-free shopping for tourists. As we mark English Tourism Week, is it not time that we had a full, independent review of the Treasury’s data on tax-free shopping?

[Nigel Huddleston]

I thank my hon. Friend for her consistent championing of tourism, particularly during English Tourism Week. It is not in the OBR’s remit to consider the effect of alternative policies and, as expanding tax-free shopping to EU visitors is not current Government policy, it has not considered that. However, the findings of the review will be useful in giving insights on the overall behavioural incentives of the policy, which will be relevant for both EU and non-EU populations. It is therefore right that the Government take time to consider the OBR’s findings along with other representations and within the context of broader data, as announced in the Budget.

[Andrew Bridgen (North West Leicestershire) (Ind)]

T1. If he will make a statement on his departmental responsibilities.

--- Later in debate ---

[Mr Ranil Jayawardena (North East Hampshire) (Con)]

I am delighted that my right hon. Friend the Chancellor is seeking to make the tax system more family friendly, including by collecting household data in the years ahead, but being family friendly includes looking after the family home. Sweden abolished inheritance tax in 2004. The result was a boom in entrepreneurship, economic growth and higher tax revenues. Will he, or one of the excellent ministerial team, meet me to discuss that further?

[The Financial Secretary to the Treasury (Nigel Huddleston)]

I thank my right hon. Friend for his advocacy in support of families. We have had conversations, and I know that he very much welcomes the changes to the high-income child benefit charge and child benefit. We always keep taxes under review, and I am always delighted to meet him.

[Dame Diana Johnson (Kingston upon Hull North) (Lab)]

Does the Chancellor accept that he has caused a great deal of anxiety and further distrust among those who have been infected and affected by the contaminated blood scandal by not making any provision in his Budget for compensation, although the recommendations for compensation were made to the Government last April?

Post Office Redress

Nigel Huddleston Excerpts

Wednesday 13th March 2024 Written Statements

[The Financial Secretary to the Treasury (Nigel Huddleston)]

As the House knows, the Post Office Horizon IT scandal that began in the late 1990s has had severe impacts on the lives of the postmasters affected.

Following the Prime Minister’s announcement on 10 January, the Government have today introduced the Post Office (Horizon System) Offences Bill. The Bill defines a clear set of criteria for those convicted as a result of the Horizon scandal, and individuals in scope will have their conviction quashed. This is to be followed by swift financial redress delivered by the Department for Business and Trade.

The Government also announced in January this year that they would offer optional fixed-sum payments of £75,000 to postmasters in the group litigation order. Today, the Government have announced that they will extend this policy to the Horizon shortfall scheme to ensure equal treatment across the schemes. Those who have already settled their claim below £75,000 will be offered a top-up to bring their total redress to this amount.

It is the Government’s priority to take swift action to ensure affected postmasters receive full and fair financial redress with little administrative burden. That is why the Government will ensure that no income tax, capital gains tax, national insurance contributions, corporation tax or inheritance tax is payable on compensation to be paid to postmasters whose convictions are overturned by the upcoming legislation or by those who benefit from a £75,000 fixed sum payment on the Horizon shortfall scheme.

The Government will legislate via secondary legislation to exempt these payments in due course.

[HCWS336]

National Insurance Contributions (Reduction in Rates) (No. 2) Bill

Nigel Huddleston Excerpts

Committee of the whole House
Wednesday 13th March 2024 Commons Chamber

[Nigel Huddleston]

I outlined the purpose of the Bill in my earlier speech. It is a short and clear Bill with a very clear purpose. It is our desire to move quickly in order for the changes to take effect from 6 April 2024. I sense Members’ desire to move quickly in cutting people’s taxes, and I will detain the Committee no longer.

[James Murray]

I fear that my speech may be marginally longer than the Minister’s, but I can assure you, Mr Chair, that it will not be too lengthy, because, as I made clear on Second Reading, we will support the national insurance reductions that the clauses in the Bill seek to deliver.

Clause 1 seeks to reduce national insurance contributions by reducing the main rates of employee class 1 and self-employed class 4 contributions, as well as the reduced rate that applies to a historic group of married women and widows. Clause 2 seeks to amend the calculation of annual maximum contributions and is effectively consequential on clause 1. Clause 3 sets out that the Bill will come into force on 6 April.

I would like the Minister to answer a couple of questions when he responds. Will he set out what conversations he has had with employers and payroll software developers about whether they will be ready to implement the provisions in this Bill from the start of the next financial year? I think I heard the Exchequer Secretary, the hon. Member for Grantham and Stamford (Gareth Davies), say on Second Reading that he was confident that a majority of employees would receive this tax cut at the beginning of the financial year, but is the Minister confident that every relevant employee will indeed receive the cut to national insurance in their first pay cheque of financial year 2024-25?

More widely, we support what this simple Bill seeks to achieve, so we will support all three clauses being approved by this Committee of the whole House.

--- Later in debate ---

[Kirsty Blackman]

Thank you very much, Mr Chair—hopefully that is an acceptable form of address to use. I want to speak about the Bill in general and some of our concerns about it. The reality is that this is the wrong measure at the wrong time, as I said on Second Reading.

Earlier, the hon. Member for Hampstead and Kilburn (Tulip Siddiq) spoke about her concerns about the SNP’s policies on oil and gas. She says that we are not putting workers first. Unfortunately, the Labour party’s plans for green investment in energy mean that 100,000 jobs will be lost in Scotland, which is very clearly not putting workers first—unless it is only workers in England who count—given that the money will go on nuclear power.

On the details of this Bill, the reality is that public services are creaking and really struggling. I have spoken to the Electoral Commission, which is concerned about whether it will even be able to deliver elections properly, given that mandatory voter ID has been introduced. The commission was able to co-opt people from other areas in order to ensure that all the recent by-elections were run properly. Will the Minister make it absolutely clear that if there is a general election this year—which there almost has to be; there certainly has to be one in the coming financial year—local authorities will have enough money and people to be able to deliver and service those elections? Will they have enough resources to be able to do that?

The 2022 autumn statement allocated more money to the NHS for 2024-25 than this Budget allocates, so it is a bit of a cheek for any Conservative Member to stand up and say that the Government are putting more money into the NHS. They are putting less money into the NHS than they proposed in autumn 2022. The consequentials that arise from the increase this year are actually less than the in-year consequentials that the Scottish Government had for the NHS in this current year, so it is a very minor increase, because it only works out to in-year terms—[Interruption.] Does the Chief Secretary to the Treasury, the right hon. Member for Sevenoaks (Laura Trott) want to intervene? It is ridiculous for the Government to say, “This extra money is going into the NHS” when it is demonstrably less than they intended to spend on the NHS back in autumn 2022.

The Bill is going to make changes to the national insurance rates, and those changes will disproportionately impact higher earners. The Minister was slightly disingenuous when he said that the changes represent a higher percentage for people on lower incomes. Yes, but that is significantly less money. A band 2 worker in the NHS will be getting a £341 reduction in their national insurance rate. An MP in this House will get four times that. How is it fair that somebody in this House who is, in the main, not struggling to make ends meet will get £1,300 when someone working in the NHS will get only £300?

NHS workers have seen exactly the same increase in their energy bills as we have. They have seen exactly the same increase in council tax—actually, no, they have seen a much higher increase in their council tax bills if they live in England compared with those who live in Scotland. They have seen the same 25% hike in food prices. Given that those on lower incomes spend more money on food proportionately than those on higher incomes, that 25% inflation in food prices disproportionately hits families who are earning less. Therefore, we need to give even more to those families, rather than saying, “Well, it’s a higher percentage of your income so you’re okay. You’ll be fine with £340, but those people who are earning 85 grand a year standing in the House of Commons deserve £1,300.”

The hon. Member for Norwich South (Clive Lewis) made a very good speech on this change, and as he said, it is the essence of trickle-down economics in action. The Government are hoping that if rich people get richer and inequality increases, those people at the bottom of the pile will somehow magically get richer as well. There are much better ways to do this. One of the worst things about this whole situation—apart from the fact that Labour Members are unwilling to oppose it—is the decimation of public services that will result from it. The fact is that we have had 14 years of austerity and that is set to continue. People are going to lose out on vital services. The NHS is absolutely vital. Every one of us has had some sort of interaction with the NHS, yet the Government are setting themselves up for decades of pay battles with staff members because they will be unable to give the pay uplift that people deserve. They are setting us up for the decimation of those services.

I mentioned in my Budget speech last week that £1 billion-worth of cuts have been made by local councils to arts funding. That means children cannot access arts education, cannot go to a local theatre with reduced-price tickets from their local council, and cannot access all these extra things. People are struggling to access the most basic services because local authorities are creaking at the seams, yet the UK Government’s priorities are to allow a 4.99% increase in council tax and to ensure that higher earners get £1,300 whereas those on the minimum wage of £11.44 an hour who work 20 hours a week see absolutely no benefit.

[Nigel Huddleston]

I probably will not respond to everything we have heard today, as we thoroughly addressed many of the issues in the Budget debate.

In response to the new comments, I assure the hon. Member for Aberdeen North (Kirsty Blackman) that we always ensure that the democratic process is adequately funded. She is dismissive of the £2.45 billion increase in NHS spending that was outlined in the Budget, but it is a significant amount and, as she is aware, it is a real-terms increase. I agree with the hon. Lady on the importance of arts, culture and the other areas she mentioned, which is precisely why the Budget had measures to extend tax reliefs.

My opposite number, the hon. Member for Ealing North (James Murray), asked about the logistics of implementing and executing the tax change. We understand the impact of policy changes, and I put on record how grateful we are for all those who have implemented and executed the recent changes so speedily and effectively. Employees whose employer is unable to make changes in time, and who have left their employment, may request a refund from HMRC. The Government are confident that the majority of software developers will be able to make changes to their payroll software in time for 6 April.

On the new clauses, we have outlined the policy today. The impact of any changes to policy would, of course, be subject to the usual public scrutiny of costs, including from the OBR. It is therefore not necessary to produce a report at this stage. The OBR’s “Economic and fiscal outlook” publication for the spring 2024 Budget includes an analysis of the impacts of threshold freezes, including on the number of people brought into paying tax. It is therefore not necessary to produce an additional report at this stage, so we do not believe new clause 1 is necessary.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clauses 2 and 3 ordered to stand part of the Bill.

New Clause 1

Review of the effects of reducing employee and self-employed NIC contributions to zero

“(1) The Treasury must publish before the end of the parliamentary session in which this Act is passed an analysis of the effect of —

(a) replacing “8%” with “0%” in section 1(1) of this Act,

(b) replacing “1.85%” with “0%” in section 1(2) of this Act, and

(c) replacing “6%” with “0%” in section 1(3) of this Act.

(2) The analysis in subsection (1) must set out the expected impact of the changes in subsection (1)(a) to (c) on total receipts to the National Insurance Fund in each of the financial years from 2024/25 to 2028/29.

(3) The Treasury must request the Government Actuary to make an assessment of the consequences for the Consolidated Fund in each of the financial years from 2024/25 to 2028/29 of shortfalls in the National Insurance Fund that would result from a zero rate for employee and self-employed national insurance contributions.”—(James Murray.)

This new clause would require the Government, before the end of the current parliamentary session, to set out what the impact would be on total receipts from national insurance and overall public finances of reducing national insurance contributions for employees and self-employed people to zero.

Brought up, and read the First time.

[James Murray]

I beg to move, That the clause be read a Second time.

--- Later in debate ---

[The Second Deputy Chairman of Ways and Means (Mr Nigel Evans)]

Thank you very much. Can someone from the Liberal Democrats inform the Chair who their tellers will be, as their amendment has been selected for a separate Division?

[Nigel Huddleston]

As I mentioned earlier, the impact of policy and any changes to policy will be subject to the usual public scrutiny, including from the OBR on costs. It is therefore not necessary to produce additional reports. I will not play into the hands of the Opposition today by commenting further on their scaremongering. I refer the shadow Minister to the answer that I gave earlier, which I thought was quite clear. I am sorry that he is incapable of understanding the difference between an ambition and a policy, but the rest of the House seems to understand it. Hopefully, he will catch up at some point.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Nigel Huddleston]

I beg to move, That the Bill be now read the Third time.

I am grateful to all right hon. and hon. Members who have participated throughout the Bill’s passage today, and to you, Madam Deputy Speaker, and the other Deputy Speakers for skilfully guiding us through the process. I also thank all the Clerks, all stakeholders and all the officials for their work on bringing the Bill to the Floor and delivering tax cuts to the people of the United Kingdom. I commend the Bill to the House.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Minister.